Category: Life Sciences

In our new guide we’ll share the 4 reasons why life sciences and the cloud belong together!

In a life science business, there is no lack of data related to product development, clinical trials, production (in-house and contract manufacturing), quality assurance, costing, the supply chain and other areas of the operation. How do you make sense of it without investing in compliance, data processing and analytical technologies?

In the cloud, life science companies can take advantage of the most powerful analytical tools available today. The cloud also supports your growth with cost controls or profit erosion. As leading life science companies are undergoing transformation into digital business and other are preparing for transformation initiatives to become compliant, more relevant and more competitive, the cloud is the single most important enabling element.

It is very common for specialty pharmaceutical (pharma) companies to work with Contract Manufacturing Organizations (CMOs) and Third Party Logistics companies (3PLs). A typical scenario is for the pharmaceutical company to procure the active pharmaceutical ingredient (API) from a vendor and have it drop-shipped to the CMO, who will add other ingredients as well as perform the manufacturing service. Often, the product is then shipped to another CMO that will perform the final packaging of the product and ultimately send it along to a 3PL that performs warehousing and sales order processing services. Dynamics AX has excellent functionality for properly tracking and accounting for all of these steps, as well as a robust toolset for importing the data to process each step in the supply chain without the need for manual intervention. It is important, however, to work with the CMOs to determine their capacity for providing data for integration into the ERP system prior to beginning the ERP implementation process, as this can occasionally be a significant limiting factor in the system design.

Many pharma companies desire to trace lot numbers from raw materials through finished products in their own ERP system, as opposed to relying on the CMO for this documentation. This means that the CMO must transmit lot number data for integration into ERP as part of the transaction records. Unfortunately, providing detailed inventory transactions with lot numbers in a timely manner is not something that all CMOs can offer. For example, if the CMO offers to send over the quantities and lot numbers of API received from vendors and the quantities and lot numbers of finished goods that they have produced, but cannot send over “real time” the quantities and lot numbers of the API used in the production of each individual batch of finished product, the pharma company must resign itself to simply “back-flushing” a standard quantity of the ingredients used in production (per the Bill of Materials). This, of course, means that the ability to do in-house lot tracking is lost. However, there is still significant value to even this limited type of integration. As long as periodic stock count “true-ups” can be sent by the CMO to ensure that the back-flushed quantities are accurate and leaving correct inventory balances, the pharma company has gained the ability to maintain a perpetual inventory for both the finished goods and the API at the CMO locations. This, in turn, allows for inventory planning and control functions such as MRP to be managed using the ERP system.

While it is common for 3PLs to handle the entire sales management process (sales order processing, shipping, invoicing, accounts receivable, cash application), they sometimes simply perform warehousing duties, leaving the pharma company to advise them of orders to be shipped and to perform all billing and accounts receivables processes in-house. This latter scenario generally lends itself to a simple communication flow, whereby the ERP system transmits the sales order information (customer, ship-to address, items, quantities, etc.) to the 3PL, and the 3PL sends back confirmation of the quantities and lot numbers shipped. It is the when the 3PL handles the entire sales process that more decisions need to be made regarding integration points. To keep inventory quantities and accounting up to date in the ERP system, it is necessary to at least receive summarized updates of quantities sold and revenue, as well as summarized cash and AR updates. Often this is deemed sufficient, as any attempts to track detailed sales and accounts receivable data is redundant with the services being provided by the 3PL. Presumably, such data is easily obtained by reports from the 3PL. However, should the pharma company desire to bring this data into ERP, most 3PLs can provide detailed sales data as well as details of cash receipts and credit memos. The one area that sometimes proves challenging is the application of credits and payments to invoices (the “marrying up” of the documents). For example, after transmitting that a particular credit was applied to a given invoice, if a change is made and the credit is re-applied elsewhere, that change would need to be transmitted as well. The challenges of having to handle these types of updates in order to “mirror” the 3PL often lead pharma companies to choose to simply rely on the 3PL for managing and reporting on all Accounts Receivable details, and to not bring that data into the ERP system. It is important to discuss with the 3PL the desired level of integration and, based on their business processes, determine what type of integration is manageable.

A $200 million pharmaceutical company based in Arizona has selected Tridea Partners and Microsoft Dynamics AX 2012 to support their ERP and business management needs.

One of the leading pharmaceutical (pharma) companies in Arizona has completed a formal system selection process and is moving forward with Microsoft Dynamics AX and Tridea Partners. This pharma company selected Tridea Partners because of their experience in the life sciences and pharma industry. Microsoft Dynamics AX 2012 effectively addresses many of the pharma requirements. “We were able to speak their language around FDA system validation, integration to CMOs and 3PLs, process manufacturing functionality along with presenting a large list of pharma references”, Andy Collins, Partner with Tridea Partners, stated. Ultimately, we were the most expensive system (software and services), but the executive team still presented the recommendation to the Board of Directors to move ahead with Tridea and Dynamics AX.

This life science company has a complex operational model in that they use contract manufacturers (CMO) for some production, but also do internal production. They also currently use a 3rd Party Logistics (3PL) provider, but much of this fulfillment will be moved to the new production facility. They wanted to be certain the new system could support all these different business processes and handle the upcoming growth with their new production facility.

You’ve made it past the biggest challenge that faced your Life Sciences company – FDA approval. However, now as you take on manufacturing, sales, and fulfillment that come with your commercialization, there are a new set of system challenges that need to be addressed. Are you prepared to comply with the Sunshine Act, manage more rigorous expense reporting, and properly recognize revenue? How you choose to efficiently address these challenges can impact your bottom line.

Tridea Partners and Microsoft Dynamics can help you reach further success by providing the right combination of technology solutions.

The new HIPAA Omnibus rules go into full effect Monday 23 September 2013. There are new regulatory requirements for IT vendors working with life science & healthcare “covered entities”, such as, new required delineated business associate agreements (BAA) contracts related to detailed risk-based assessments and detailed alignments, named HIPAA Security Officers, documented HIPAA compliance and IT training, human genetic information now included in protected health information (PHI) and the list goes on and on…

An in-depth legal review article takes a deep dive into some of the most significant changes that will impact IT vendors and covered entities.

1. To promote the health care industry’s use of health IT to make care safer; and

2. To continuously improve the safety of health IT.

The HHS Office of the National Coordinator (ONC) for health information technology (HIT) will coordinate with AHRQ, CMS, FDA, FCC and the Office for Civil Rights (OCR) centralizing on FDA’s risk-based regulatory framework for health IT, that protects patient safety, promotes innovation and avoids regulatory duplication.

FDA’s Risk-Based Regulatory Framework

The underpinning of FDA’s risk-based regulatory framework for health IT is Good Informatics Practices (GIP) guidelines. Today the Introduction and Intended Use and seven chapters or modules have been extensively peer review and published by HIMSS.org.

Our friends at Abnology (www.abnology.com) played a significant roll in leading the authorship of GIP’s and utilize GIP’s as their architectural reference in their product the Trusted Health Cloud® enterprise system, released in 2010 and today available in data centers nationally.

We recommend you become familiar with GIP’s. The GIP’s are a great resource to utilize in the HHS required HIPAA compliance and IT training.

We have made available GIP Executive Summary Introduction and Intended Use publications from HIMSS:

For more information on how this may impact your company, please contact Tridea Partners at sales@trideapartners.com. Tridea Partners is a leading Gold Certified Microsoft Dynamics AX, Dynamics GP, and Dynamics CRM partner serving Southern California and Salt Lake City regions.

This post was written by Howard Asher, Chairman at Abnology, Trusted Health Cloud.